Does turning 25 guarantee you a better car insurance rate?

There are several factors that can influence your car insurance rate, with age being one of them. Young drivers often look forward to their 25th birthday, which is when car insurance rates are typically expected to decrease.

But turning 25 doesn’t mean your rate suddenly drops. Depending on your driving record and how much time you’ve spent behind the wheel, you might not see much of a rate decrease after all.

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Why can car insurance rates improve when you turn 25?

One of the biggest determining factors for the cost of car insurance premiums is age.

According to the National Highway Traffic Safety Administration, more than 1,700 drivers ages 15 to 20 died in motor vehicle crashes in 2018. Young drivers accounted for 5.3% of all drivers in the U.S., yet made up 8% of all drivers involved in fatal crashes that year.

It's more expensive to insure younger drivers. Teens and young adults are more expensive because insurance companies see them as high-risk drivers who are more likely to get into an accident and file a claim.

Generally, rates will slowly drop over time until the age of 25, as the driver matures and gains more experience. Age stops being a determining factor until drivers reach age 65, which is when insurance rates can start going up.

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Does turning 25 guarantee you a better rate?

Your car insurance rate doesn’t change overnight as soon as you turn 25 and it’s not a guarantee that your rate will necessarily improve. There are other determining factors that make it hard to predict whether your rate will lower as you approach the age of 25.

If drivers fall within the following categories, they may not see a decrease in rates:

• Drivers with accidents or violations on their driving record - If you have an accident, speeding tickets, moving violations or other insurance claims on your record, your car insurance rate is likely to increase.
• Inexperienced drivers - If you got your license at the age of 25, you’re likely to pay higher premiums than a 25-year-old who got their license at the age of 16.

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What factors can impact my car insurance rate?

Your age, experience and driving record are the biggest factors that influence your car insurance rate but they aren’t the only ones. Here are some other factors that may influence your rate:

1. The year and make of your vehicle - Your insurance rate is going to be much more expensive if you have a brand new sports car than it would be for a 2002 Civic. If your vehicle is more expensive to replace, your insurer will charge you more.
2. Where you live - Car insurance is regulated at the state level and rates are adjusted according to zip code. Rates are more expensive in areas with more drivers or if the area is prone to flooding, wildfires or crime.
3. Annual mileage - The more miles you drive, the more risk you have of being in an accident and filing an insurance claim.
4. Your credit history - Insurance companies use credit-based insurance scores in deciding what price to offer coverage to consumers. Credit-based insurance scores aren’t used to determine whether premiums will be paid but it’s used as a factor when estimating the number of insurance claims the customer is likely to file.
5. Your marital status - Statistically, married couples have shown to be less of a risk than those who are single.
6. Your gender - Male drivers, especially young male drivers, are seen as being at higher risk than female drivers and tend to pay more for auto insurance.
7. Coverage level - If you choose to carry more coverage, your insurance company will need to pay out more to reach your coverage limit.
8. Insurance company - Car insurance companies use their own unique formula when determining rates. This is why it’s important to shop around.

While some factors are out of your control, being a responsible driver and comparing insurance companies can help you get lower rates.

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